Unpaid invoices for broken financial year

[Okee]

Dear all

It would be a great help if you guys can help me with the below question

Our company has a broken financial year running from April 2016 to March 2017.
We received an invoice of 12,000 from our service provider in early March as service fee for the whole 2017. To prepare the financial statement from April 2016 to March 2017, I have to first Cr account payable 12,000 since the obligation was already recognize in March. However, the bookings to expense account can only be 3,000 since the service we received in 2017 is three months for the mentioned reporting period. I was wondering if there is a account where I can record the remaining 9,000 . And for sure I know it's not prepaid/ deferred expense since the invoice is not settled before the year-end.

Many thanks in advance

 

[Drmdcpa]

I think you do not know things for sure like you for sure believe you do.

Cr AP 12k
Dr Exp 3k
Dr Ppd Exp 9K

When you pay invoice

Cr Cash
Dr AP

As time passes

Cr Ppd Exp
Dr Exp

By recognizing the full invoice at time of receipt, you are implying it is fully owed; hence AP for 12k. The cash flow does not impact the recognition of the AP.

Once the AP is fully absorbed, Ppd Exp has to be booked.